An illustration of bitcoin on Euro banknotes.
Nicolas Economou | NurPhoto via Getty Images
The extreme movements up and down are relatively common for bitcoin and are expected to continue.
“The only thing I can expect for sure is volatility,” said David Yermack, a professor of finance at New York University Stern School of Business. “From day one, this has been a risky investment for people.”
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Bitcoin has seen both astronomical growth over the last decade and major selloffs at various points in between. Although many bulls point to its past performance as a sign that the cryptocurrency will continue to surge in the future, that might not happen, according to Yermack.
“It’s a purely speculative asset,” he said, adding that while bitcoin has grown in popularity, it’s still not considered a mainstream investment, meaning that many have little information about the asset.
“You should never invest in anything that you don’t understand,” said Yermack.